MUMBAI: The Indian rupee closed at its weakest level on record on Monday pressured by likely outflows from local equities and the unwinding of carry trades as fears of an economic slowdown in the United States roiled markets.

The rupee ended at its all-time low of 83.8450, down 0.1% from its close at 83.8025 in the previous session.

Benchmark Indian equity indices, the BSE Sensex and the Nifty 50, closed lower by about 2.7% each, their worst single day decline in over two months.

Aggressive dollar bids from foreign banks, likely on behalf of custodial clients, pressured the rupee through the day’s session, a foreign exchange trader at a state-run bank said.

But intervention from the Reserve Bank of India helped limit the rupee’s losses, traders said.

The RBI “for now is protecting (the rupee) near 83.85 levels but it’s quite likely that it moves to 84 this week if the pressure continues,” a trader at a foreign bank said.

Global stock sell-off pushes Indian rupee to record low

The dollar index fell about 0.5% to 102.6, its lowest since March, while Asian currencies were up 0.1% to 1.7% with the offshore Chinese yuan touching its strongest level since January.

The rupee diverged from its Asian peers hurt by the unwinding of carry trades which used the Chinese yuan to fund long bets on the local currency.

Going forward, the dollar-rupee pair “may face resistance around 84 and find support at 83.65,” Dilip Parmar, a foreign exchange research analyst at HDFC Securities said, adding that he expects the RBI to intervene aggressively near the 84 handle.

Investors now await U.S. services PMI data due later in the day wherein a weaker-than-expected reading could compound worries about a potential recession in the United States.